SellAustinTexas

Austin Area Sales and Stats September 2011

Good news on the strength of our local economy and the strength of the housing market.  Inman.com recently reported on the thriving Austin economy, citing our big population growth, AAA municipal bond rating and, most importantly, the growing job market as the major contributors to our robust economy.

The article goes on to interview several area realtors who all come to the same consensus.  Rental rates are rising fast and homes that are reasonably priced, in good shape and close to downtown are selling fast.

September sales stats show that home sales are picking up.  1,480 homes were sold in September of 2011 as compared to 1,171 homes sold in September 2010.  Pending sales were also up significantly with 1,783 last month as compared to 1,502 in September 2010.  New listings continued the downward trend from previous months with 2,284 new listings this past September as compared to 2,505 in September of last year.

We are continuing to see a tightening of the market with new listings decreasing and sales increasing.  However, home prices are staying relatively flat.  That’s due to a tight mortgage market shutting out many potential buyers.  Although mortgage rates are very low, many buyers are still unable to get a loan because of strict loan qualification policies.  This creates a lot of pent-up demand.  In the coming months, mortgage rates will rise and banks will start to loosen loan qualification standards.  This will open the market to a lot of new buyers and we will see home prices on the rise.

If you are thinking of buying, now is the time.

Homes sales in Austin continued to see a rise in volume for August of 2011. A total of 1,669 single family homes sold in the Austin area in August compared to 1,381 in August of 2010. The total volume of sales rose to $454,979,712 compared to $381,540,256 in August of 2010.

Average sales price fell to $272,606 from $276,278 in August 2010. Not as bad as the dramatic decrease we saw in July. This is still directly attributed to a big decrease in home sales in the luxury market. $500K+ home sales in August of 2010 contributed 9.7% total volume compared to only 8.3% in August of this year.

In price ranges that are affordable for most buyers, home sales are remaining steady or increasing. Mortgage rates are low and loans are readily available for qualified buyers.

If you are interested in purchasing home for investment purposes, now is the time. The facts about the Austin real estate market remain the same. We have a booming population, mortgages are cheap and rents are rising. Check out this great recent Wall Street Journal Article for six mistakes to avoid when looking for a home investment.

If you have questions on the Austin housing market and whether or not it’s the right time to buy or sell, feel free to give Chuck Stephens, our buying expert, a call at 512-947-8077 or drop him an email at cstephens@cbunited.com. To see current inventory, visit our web site www.dmtx.com.

If you are considering buying a home in Austin, the time is now.  Home prices have not dropped in the past few months.  In fact, they are increasing.  Mortgage rates remain at an all time low.  Most importantly, demand is increasing.  We are at an equilibrium in the market as far as buyers and sellers and the supply of good lots and homes is getting very tight.  If there were a time to make a move and invest in a home – the time is now.

The most important factor in selling a home is the price.  There’s 3 different categories of prices and every home on the market falls into one of them.

#1:  Overpriced. Most buyers think all homes are overpriced.  That’s because they are looking for a great deal – a steal.  And rightfully so.  We all want to get a deal. But, it’s just not true.  Homes that are overpriced in this market stick out like a sore thumb and most likely won’t even fall onto a buyer’s radar screen.  This happens for several reasons.  The seller bought it 3 or 4 years ago and has to get back what they put into it or the seller makes a few thousand dollars worth of improvements, calls it a remodel and tries sell it at an inflated price.  It is often the fault of a real estate agent not being honest with a seller about the market and instead allowing the seller to dictate the price – not the market.

What to do?  Go ahead and make an offer based on the market.  Sometimes a seller needs a reality check before making a price adjustment.  Maybe you won’t be the first one to make that offer and it could get accepted.

#2 Market Value.  Most homes are priced at market value.  Getting a good deal on a home at market value is a matter of timing, education and skill.  An experienced agent can work on your behalf to find a seller’s motivation, agent’s motivation and points beyond price that can get a deal done.  In this instance, offer less than the asking price and go from there.  More often than not, they will come off their price.  But as the Austin market gets tighter, we are seeing properties sell at or very close to their asking price.

#3 Undervalued. Getting an underpriced home is about being in the right place at the right time.  There are a lot of buyers out there waiting for that low priced deal to come along.  Deals go quick and a savvy agent can make sure you get in front of them before someone else.

It doesn’t take a rocket scientist to know a good deal from a bad one in today’s market.  Internet sites like AustinHomeSearch.com provide a great jumping off point to begin a home search. You can even compare homes to figure out pricing.  But when it comes to making the investment, it’s smart to have someone who has intimate knowledge of the market and can negotiate on your behalf to make sure the investment is the right one.

You probably saw the headlines last week – according to Standard & Poor’s S&P/Case-Shiller Home Price Indices, U.S. home prices declined by 4.2% in the first quarter of 2011, after having fallen 3.6% in the fourth quarter of 2010. The national index hit a new recession low with the first quarter’s data and posted an annual decline of 5.1% versus the first quarter of 2010. Nationally, home prices are back to their mid-2002 levels.  These numbers make for some grim news stories but what are the underlying factors and how do they affect Austin’s market?

- One of biggest factors for these deflated numbers is the First-Time Homebuyer Tax Credit from last year.  There’s bound to be a fall since there is no longer such a major incentive for first time buyers.

- Many metro areas have an excess of inventory created by the housing boom and bust.  Texas does not.  In fact, in Austin, our inventory is at an equilibrium.  Homes that are priced well will sell.

- The Texas economy and Austin’s economy in particular are experiencing steady growth.  We have relatively low unemployment and a diverse economy in high growth industries – people want to be here.  Over 900 families are projected to move here a month throughout 2011.

- New construction in the Austin area is slow to almost non-existent due to housing developments not getting financing.  Lack of new homes will trigger an increase in home prices.  We have already seen an increase in the median home price from the 1st quarter of last year.  Home values are expected to increase by 4.6% next year, 14.6% in 5 years and 87.65% in the next 10 years!

Deflated home prices, low mortgage rates, lack of new construction and a big increase in population will create big increases in future home prices.  Don’t let the national headlines fool you – now is the time to buy!

Not only does this Spring in Austin and central Texas mean warmer weather, bluebonnets and heading to the great outdoors, it is alsolooking like a great Real Estate season here and in Texas.  With new construction of both homes and multi-family properties slowing dramatically and, according to the Austin American Statesman, central Texas employers adding 11,400 jobs from February 2010 to February 2011, the time may be right again to buy central Texas real estate.

A recent article in Fortune proclaimed “Forget stocks. Don’t bet on gold. After four years of plunging home price, the most attractive asset class in America is housing” .  With a historic drop in new construction and with housing prices down…now is the time to buy.  As the economy continues to grow and with rental rates still rising, buying and investing is up.  Because there is very little new construction happening..demand could start exceeding supply and prices will once again begin to rise.

Read Fortune’s article; “Real Estate: It’s Time to Buy Again” here

See Wells Fargo’s Texas Economic Outlook here

If you are ready to buy…whether first home, dream home or investments, start at www.DMTX.com where you can search all of Central Texas for your perfect home, ranch or waterfront property.

The past year has brought a lot of adjustments to the Austin market.  Here’s a year-end rundown on stats (compiled as of 11-30-2010):

Total dollar volume of single family properties sold: $4,180,259,992 – down 1% from 2009

Average price for single family homes: $194,000 – up 3% from 2009

Single family homes sold: 16,477 – down 6% from 2009

Average days on market: 76 – down 4% from 2009

Looking at the numbers, we saw the average price rise and the average days on market go down – both signs of improvement in the market.  However, the total volume went down in both number of dollars and number of homes.   These up and down stats point to a 2010 Austin real estate market going through a period of adjustment.  It will be interesting to see how 2011 turns out.

Here’s some recent good news in terms of the economy.  According to the Brookings Institution, Austin was one of only 15 major metropolitan areas to experience job growth in all 4 quarters of 2010. Forbes ranked Austin as the 10th most affordable city in the US. It notes our strong high tech job economy.

Let’s face it, some homeowners have gotten in way over their head on their property and just need to get rid of it. There’s just not a lot of buyers out there and they can’t sell it for what they paid for it. That leaves them with two options: Short Sale or Foreclosure. Most people who are underwater on their loans opt for Foreclosure – defaulting on the loan and giving the property back to the bank. Often people have not fully explored all their options with their lender and are unaware of the Short Sale option. In simple terms, a Short Sale is asking the lender to take less than what is owed on the loan. This allows a homeowner to lower the selling price of their home to a price point that will get it sold and prevents them from defaulting on the loan. Here are some major differences between a short sale and foreclosure.

1) Credit Score – Defaulting on a loan and going into Foreclosure will result in a 200-400 point hit on your credit score. That’s big and it will affect not only your ability to get another home loan but any credit card limits, car loans and any other purchases made from credit. A Short Sale typically will reduce your credit score from 50-130 points – a much more manageable hit.

2) Future Home Purchase – A Foreclosure on your record will prevent you from obtaining a loan anywhere from 5 to 7 years. However, if you are not behind on payments and opt for a Short Sale, you are eligible to purchase another home under Fannie Mae in 2 years. The wait for an FHA loan is 3 years.

3) Deficiency Judgement – Another more immediate cost associated with Foreclosures and Short Sales is the deficiency judgement. This is the lender asking for you to pay them the difference between the sales price of the home and the value of the loan. The government and the lender see this as income and could have tax implications along with the fact that the lender still wants money from you. Typically, with Short Sales these days, the lender is willing to forgive that difference. With a Foreclosure, the lender is less forgiving and usually goes ahead and issues a deficiency judgement for that difference.

Although neither is a good alternative to hanging in there and making the payments, pursuing a Short Sale has much less of a financial impact than a Foreclosure.  Here’s a link to some resources for preventing Foreclosure.

Staged kitchen in Travis Country home

This recent sale goes to prove two essential elements in real estate.  If a home stands out among the crowd through pricing and presentation, it will sell.  Not only will it sell, it will sell FAST.  This home in Travis Country sold because we priced it right – at market value – and the sellers did everything right as far as staging and preparing the home to get on the market.  Things like paint touch ups, fresh mulch in the flower beds and “de-cluttering” the home went a long way to make this home stand out from the other homes in the area.

Manicured Yard

Pricing was the second essential element to make this one stand out from the crowd.  We priced this fairly for the market – not too high and not too low – and got very close to the asking price.  Overpriced listings don’t sell.  A home can be flawless and move-in ready but if it’s priced too high, it will sit on the market.

I’m not using this post to brag about our abilities (but I do think we do more than 90% of the realtors out there) but instead using it as an example of what happens when the fundamentals of pricing and presentation are properly executed.

Reasons to Buy a Home Now

The Buyers Market

1.  High Inventory: There is currently a balance of supply and demand that leans in the buyer’s favor. High inventory leaves a buyer with many available choices, and in all price ranges.

2.  Negotiating Power: The high inventory also allows for decreased prices and more negotiating power for the buyer. Not only can a homebuyer find their dream home, but they can do so for a great rate.

Home Prices

3.  Home Prices: Prices have come down a great deal from years past, and will only continue to rise over time.

4.  Interest Rates: With interest rates also at the lowest point in years, a single housing payment is going farther than it did in the past. Interest rates will not remain this low, and are expected to rise again soon.

Tax Savings

5.  Tax Deductions: Buying a home allows for many tax deductions, such as mortgage interest, mortgage insurance and real estate taxes. This means that after taxes, your mortgage payment will be lower than a rent payment would have been.

6.  Tax Credit: The new tax credit for homebuyers has been extended through spring, with an $8000 credit for new buyers and a $6500 credit for repeat buyers.

Personal Savings

7.  Appreciation: Home prices always move upward in the long run, appreciating the value in a home.

8.  Equity: If you have an amortizing loan, each mortgage payment is building equity in your home. It is such a gradual change many people don’t notice it, but it is allowing you savings.

9.  Rising Rents: Rents are expected to continue to rise.

Incentives and Extras

10.  Material and Non Material Extras: With the buyer’s extra sway in negotiations, you are able to ask for things that may not have been previously included, such as material items (like appliances) or non material items (such as a home warranty) as part of the purchase of the home.

11.  Home Improvements: Many sellers are working hard to make their homes move in ready, with extra home improvements and updates.

12.  Maintenance Costs: With updates and repairs before the home’s purchase, a buyer can save money in maintenance along with having a newer looking home.

Sandy Ranch

CNN Money’s article “What Housing Bust?” covers what areas of the nation have done well in the housing market, and why. According to writer Les Christie, areas with plenty of available developable land have smaller swings between home price highs and lows. This is because, when the demand for housing spikes, home builders are able to build more homes and keep the housing prices in check. Speed is also of the essence here, home builders need to be able to build quickly, thus, the need for available land.

“Elasticity of supply,” this is called, according to Mark Fleming, chief economist for First American CoreLogic. And Christie says, it is the definition of Texas real estate, and similar throughout all the metro areas.

“Texas is the poster child for these ‘steady Eddie’ states. House prices during the past three years rose in all 26 metro areas with gains ranging from 2.8% for Dallas, the second largest metro area, to 9.7% in Houston, the largest, to a whopping 32.5% in Odessa.”

This is part of what is causing the metro areas in Texas, including Austin, to grow so rapidly. Landowners in the Austin area should continue to see their investments in high demand for buyers and developers.